Mortgage rates going up.
Rising bond yields have pushed TD to raise some medium and long term mortage rates with more increases forecast:
Soaring bond yields have set the stage for a second round of interest rate hikes on residential mortgages in about a week.
After nudging rates higher on longer-term mortgages last Wednesday, Toronto-Dominion Bank yesterday raised borrowing costs on its five-year, fixed-rate loan by 40 basis points to 5.85 per cent, effective today.
Last week, TD and the other banks increased rates on five-year, fixed-rate mortgages by 20 basis points to 5.45 per cent.
While no major competitor had followed TD’s move by late yesterday, experts suggested higher rates are likely inevitable because banks are facing higher borrowing costs on the bond market. Banks tap the bond market to finance mortgages because they lend out more money than they attract through deposits.
So here are some questions for discussion: Mortgage rates are near an all-time low, which means you can still borrow money cheaply and local house prices have dropped more than 10% from their peak. So is now a good time to buy? What happens to prices when mortgage rates go up? Are you saving for a higher down payment in an higher interest rate environment or jumping in now, potentially paying more but with a lower interest rate on the debt? What about buying in non-local markets that have fallen closer to 50% off from their peak?
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jesse Says:
June 10th, 2009 at 11:32 am
“So is now a good time to buy?”
See long bond yields compared to the 5-year bonds at the Bank of Canada Bond rate page. Long bonds are at 4%, 5 years at 2.7%. If anyone thinks mortgage rates are going to stay low forever, think again.
RE is a long term investment. Looking only at payments for 5 years is NOT long term financial planning.
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luc Says:
June 10th, 2009 at 11:36 am
I have a 50% downpayment and I’m waiting for the rates to go up, to remove some of the competition from the market. Hopefully this will bring the price of properties down.
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VultureBoy Says:
June 10th, 2009 at 12:04 pm
It seems to me people only think about their present-day mortgage payments. The more conservative ones will think in terms of 5 year rates. I don’t know anyone who even considers what rates will be five years from now.
It is not hard to imagine a 6 percent rate in 5 years. People buying 35 yr mortgages today will need to get good salary raises or scrimp and save in 5 years to cover their 2014 payments. I hope the latter enjoy Kraft dinner.
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D,s,j,b,s,v. Says:
June 10th, 2009 at 12:37 pm
TD Canada Trust only like to compete with top five banks they don’t care about interest rates offered by bottom five for example: http://www.finderfin.com/ 3.79% vs http://www.tdcanadatrust.com/mortgages/numbers.jsp 4.55% 5yr fixed closed mortgage other side mcap offer 3.15% 3yr closed etc.If the buyers are not really tied to any banks then interest rates are not big deal you can always proceed to low level lenders.All these big five most likely to raise interest rates following changing climate then they feel humiliated when buyers does not knock their doors- because of competitions it is easy to hunt lowest interest rates near you.
I have been paying 6% on my previous purchased since 97-2007 but now i am paying only 3.50% on two of my recent purchased properties.I have locked onto 3.75% with Canada Trust for future purchase,Future is friendly on interest rates but home price will break your back bone every year for decades to come.
One of the easy way to convince any bank is:just pick up lowest figure from any lenders then produce it infront of any brokers.One of my friend is locked in at 3.15% for 5 yr other one for three year at same rates final secret:There is always a discount between posted rates than actuall rates if the posted rates are lower according to market then margin for discount rates would be lower let’s say .20 to .30 if posted rates are higher than the market circumastances,discount rates would be higher let’s say 1% to 1.25%. If you buy through Sutton Group you can have lowest interest rates than any other bank through Finder Financial.
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jesse Says:
June 10th, 2009 at 12:47 pm
D,s,j,b,s,v.: “If you buy through Sutton Group you can have lowest interest rates than any other bank through Finder Financial.”
I’m not saying firms like Finder Financial are incompetent but it would be interesting to read opinions on how sustainable their business models really are. From what I see, those are extremely narrow spreads.
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Real Estate Investor Says:
June 10th, 2009 at 12:55 pm
I have found a way to take advantage of the current low mortgage rates. If you invest with a real estate investment company, they provide you all the benefits of being an owner(profits) without having to worry about managing the property and dealing with fees and maintenance etc.With the low mortgage rates, you have an opportunity to gain more in the profit sharing.
I invested with a company called VSM Investments and have received stable solid returns monthly and annually at 16% APR.
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D,s,j,b,s,v. Says:
June 10th, 2009 at 1:13 pm
Buyers need to develop themself and like to increase their saving for that we don’t really need to know how the lender manage all these as long they have recognisition through our banking system allowed by Government.I am offering an idea to hunt for lower interest rates as i say i had borrow through TD and Scotia in the past,Through spin i over took on brokers.So basically we can go to any institution but always tell them what we know about market or else they will tell us the highest idea to pay them more.
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rp Says:
June 10th, 2009 at 1:19 pm
“Are you saving for a higher down payment in an higher interest rate environment or jumping in now, potentially paying more but with a lower interest rate on the debt?”
Let’s see: one of these options makes sense and the other one doesn’t. Buyers who need a low interest rate won’t pay off the debt quickly, which could lead to problems down the road.
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D,s,j,b,s,v. Says:
June 10th, 2009 at 1:37 pm
rp: How could you save on down payment if the prices are going up? anyway here is future posted rates 5.85% vs Current rates you can get 3.50%
Rate1.mortgage rate: 3.50%
Comparison rate: 5.85% (4.55% is special offer)
Mortgage amount: $600,000
Rate1.Monthly Payment: $2,686
Comparison Monthly Payment: $3,513
Save $827 per month.
Save $49,620 over the 5-Year term.
Save $297,720 over the 30-Year life of the mortgage.
From the saving you can pay 15% of total mortgage amount every year that would be better to buy vs saving down payments,If your monthly budget is neck to neck while you renting there is no saving anyway right? So the only smart thing is to buy that would save you few bucks after five year your spending won’t be neck to neck if you don’t loose your previous life style.
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realpaul Says:
June 10th, 2009 at 1:42 pm
jesse:
#5 j, Way to read through the bullshit Dude. Blingggggg!!!
Unless the contract is put under a microscope by a competant lawyer it’s questionable as to what security it offers mortgagor. All kinds of weasal clauses give a mortgagee an out in any number of situations. It’s a fact that most suckers DO NOT read thier contracts and those that get half way thrrough get confused and start nodding their heads because they don’t want to look stupid in front of the ‘missus’.
They don’t call these third tier lenders “bucket shops’ for no reason.
On Bonds this week. It is apparent that no one has misunderstood the risk of the Obama administrations financial plan. Geitner was laughed off the stage by commerce students at Beijing University. Risk has a cost, right the costs are being manipulated by quantitative easing but mitigation risk is not enough for the existing holders of US debt. They want to get paid back more than the devalued amount of the increasing M3. The US admin doesn’t like that but they don’t control the entire global market. There is a big treasury auction slated for tommorrow. It is being bandied around that it is already a disaster in the making.
Risk = higher intrest rates, simple equation in the bond universe.
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realpaul Says:
June 10th, 2009 at 1:53 pm
D,s,j,b,s,v.:
#9, It’s always amazed that a majority of real estate agents rent and don’t own any property and never have. You have priced your model for perfection. Are you a junior clerk at a branch outlet of Sutton? I was in that business as a manager for many years and your posts remind me of the ’sillies’. Theres a whole lot more to money than a short term rate with Suttons bird dog financial bucket shop du jour. It may be diffficult to understand a paradigm that the current generation has never experianced but kiddo, they are out there and one has it’s snout up this generations ass right now. Read something about risk management sometime.
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jesse Says:
June 10th, 2009 at 2:06 pm
realpaul: “They don’t call these third tier lenders ‘bucket shops’ for no reason.
Just a clarification, Finder Financial is a broker, not a lender. I don’t know who the actual lenders are offering such low rates but whoever they are, I’m smelling a distinct odour of arbitrage…
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Satve Says:
June 10th, 2009 at 3:16 pm
d,s,j,b,s,v
Hey it’s SATV, Dosh, browntown,krish etc.
and she’s back talking nonsense!
If you are able to read then read this article and tell us your thoughts:
http://messymatters.com/2009/06/01/buyrent/
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Anonymous Says:
June 10th, 2009 at 5:39 pm
Another one:
http://www.nytimes.com/2007/04......html?_r=2
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realpaul Says:
June 10th, 2009 at 6:57 pm
jesse:
#12 J. Even worse if you have no idea who your lender is going to be until after you have agrrrrrrreeeeeed to pay hundreds of thousands of dollars and fourty years of your working life to pay down on a real estate ‘deal’. The thousands of dollars you pay in commissions to the ‘broker’ are back loaded right onto your contract, you don’t get a ‘deal’. They treat you like you’re special allright, ’special needs ‘ that is. Bwahahahahahah.
Ted Cherneky on Global Bullshit newshour tonight had a puff piece on rising interest rates. The guys an obvious idiot.
he says:
1) Intrest rates are rising because the economy is improving in Canada while at the same time mentioning that the rate increases were coming out of the bond market not the BOC Bwahahahahaha
2) he posits that “savvy” FTB’s are getting great deals by locking in now on recent purchases. Double Bwahahhahahaha !
3 While still reading he quotes a TD Bank economist who affirms that house prices are STILL GOING DOWN Bwahahahaha.
This guy is either on drugs or he has had a lobotomy.
They should rename the Global TV News Hour the BULLSHIT & GOON SHOW.
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jesse Says:
June 10th, 2009 at 8:28 pm
realpaul: “The thousands of dollars you pay in commissions to the ‘broker’ are back loaded right onto your contract, you don’t get a ‘deal’.”
I admit I am not up to snuff on all the latest and greatest mortgage contracts out there. You’re hinting at all this back end loaded stuff but without knowing more specifics 3.5% is 3.5%. Maybe I’m asking the wrong guy here but why is 3.5% not a good deal? What specifically is in the fine print to make this deal a bad one?
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Drachen Says:
June 10th, 2009 at 9:40 pm
Jesse:
He’s saying that, for example your 500,000 mortgage, when you go with some unscrupulous brokers will actually be $550,000, in other words you pay them x amount as a commission to get you that sweetheart deal, only you won’t know how much you paid unless you go over your contract with a fine toothed comb.
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observer Says:
June 10th, 2009 at 10:15 pm
Comparing teranet and mls data, there seems to be another discrepancy: the YOY ratio of sales pair counts versus YOY ratio of mls sales do not seem to match.
For instance, the ratio of sales pair counts for nov 08 over nov 07 is about 0.60, whereas the ratio of mls sales for nov 08 over nov 07 is about 0.30.
Oddly, if you look at the ratio of sales pair counts for mar 09 over mar 08, it is about 0.53, where has mls sales for mar 09 over mar 08 is about 0.62, so the situation has reversed.
I’m not exactly sure what sales pair counts means, but if it accurately tracks the number of sales in that month, this would suggest the teranet data recorded less of a decrease in YOY sales in nov 08 than mls data, and less of an increase in YOY sales in mar 09 than mls data.
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Somebody Says:
June 10th, 2009 at 10:17 pm
ING has increased its 5-year fixed mortgage rate from 3.99% to 4.19%
http://www.ingdirect.ca/en/mortgages/index.html
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D,s,j,b,s,v. Says:
June 10th, 2009 at 10:26 pm
“It’s always amazed that a majority of real estate agents rent and don’t own any property and never have.”
Most part of Vancouver real estate is owned by R.E. Agents,Bristas,Taxi drivers and many more in the service sectors because there is no other way to dump their cash without tax.
“I was in that business as a manager for many years”
Oh really? Then you might have downloaded your properties before July 2008 nope? Aren’t you the one that called himself financial analysist?!?!!What a loser i just wonder how long have you been lurking and what about those people who takes tip from you? Your friends are amazed that you still not losing your guts as yet.I hope all those other losers are still come to read you,I wish you good luck!Hu!
Contracts are not that hard to read even if someone is not able to read it you can take it to lawyer when saving is that big do you mind paying $500 to lawyer?
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jesse Says:
June 10th, 2009 at 10:27 pm
observer, sales pair counts are only for properties that previously sold without major renovations ergo would exclude certain sales from its numbers where MLS counts all sales. I’m guessing that’s why the ratios are different.
The purpose of the sales pair methodology is to look at how same properties change their prices over time, to avoid results being biased upwards by capital being injected into a market beyond normal upkeep.
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Anonymous Says:
June 10th, 2009 at 10:45 pm
can’t wait for the increase in interest rate
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D,s,j,b,s,v. Says:
June 10th, 2009 at 10:49 pm
Satve13,
There is no comparisions between buying or renting it’s a choice whether you want to own a house,independence,privacy and stability in your life or not if you have more important responsibilities in life where you must spend your hard earning dollars it is better to rent if that was a solution this is a good place to defy right? Nice to meet you ((((happy tenant)))).
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Bob Says:
June 10th, 2009 at 10:50 pm
I bought a good condition house and have a 500K mortgage @ 3.75% for 5 years, 35 year amortization, and monthly payments of $2100. We get to stop renting and it provides my family with a long term home at the same cost as rent. Using the accelerated bi-weekly plan and adding $300 to each payment I’m looking at paying it off in 19 years! During the 5 year term if I need to I can always go back to the rent equivalent payments. At the end of the 5 year period I owe 407K. If rates have increased a lot then I’ll be used to the higher payment and will just have to live with the fact that less of it is going to the principal. What’s wrong with this approach?
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realpaul Says:
June 10th, 2009 at 10:50 pm
jesse:
#16 J. Contracts are about two things ” Time and Terms” , it was the terms part that screwed an entire nation to the south of us. What does your contract say? Like i said most boneheads don’t have the IQ to read both sides of the paperwork and find themselves bent over with a pole up their Patootie.
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realpaul Says:
June 10th, 2009 at 10:52 pm
Drachen:
#17 D, you’re absolutley right, thank you.
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realpaul Says:
June 10th, 2009 at 10:59 pm
D,s,j,b,s,v.:
#20, well you know what they say ” anyone who represents themself has a fool for a client”. And yes I have advanced degrees in a few areas so I get to dabble in interesting projects and make out like a bandit with limited risk. I own the home I live in and have owned outright a 16 unit building since 1979 that floods my account with cash every month and do not care what it’s worth. Too bad for you huh?
Sorry your feelings are hurt, Bwahahahahahahahaha.
And the tax comment…well… thats just dumb.
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realpaul Says:
June 10th, 2009 at 11:02 pm
Bob:
#24, property values could continue to go down and interest rates may go up further and faster than you could adjust your income for. There are a lot of people in this situation now which is why the new wave in foreclosures is the ‘prime’ market.
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observer Says:
June 10th, 2009 at 11:03 pm
For the ratios to be different, it would mean there are some month to month fluctuations in the proportion of excluded sales, which is plausible.
This could be checked by going backwards in time since we have both teranet and mls data for the past few years … if the fluctuation only occurs in the past six months, then some discrepancy has happened, but if the fluctuations always seem to be there, then that would suggest your explanation is correct.
For instance for nov 07/nov 06, the sales pair ratio is about 1.0, and the mls sales ratio is 0.82. For mar 08/mar 07, the sales pair ratio is 0.90, and mls sales ratio is 0.84.
Okay, still doesn’t prove anything as these are just two data points and one could come up with a number of explanations (low volume, change in market sentiment and preference, etc).
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patriotz Says:
June 10th, 2009 at 11:30 pm
Bob:
At the end of the 5 year period I owe 407K. If rates have increased a lot then I’ll be used to the higher payment and will just have to live with the fact that less of it is going to the principal. What’s wrong with this approach?
If rates have gone up by the end of the 5 year period you’ll be able to buy the same house for 407K or less, and if you’d waited to buy and just saved all the money you were paying to interest and principal over those 5 years you’d have a way bigger down payment and would be making much smaller monthly payments over the lifetime of the mortgage.
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D,s,j,b,s,v. Says:
June 10th, 2009 at 11:52 pm
http://vancouver.en.craigslist.....43203.html
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oneangryslav Says:
June 11th, 2009 at 1:27 am
D,s,j,b,s,v.:
D.s.j.b.s.v, please define “own a house” for us, because I think that your definition is not the same as mine.
If I am renting a house do I get less privacy than “owning” it?
How “independent” is a mortgage slave, and how “stable” is one’s life if s/he is working all the time in order to be able to just afford to keep up with mortgage payments?
On July 1st, after I have dropped my rent check off to my landlord (which, by the way, maybe covers 50% of my landlord’s PITI), and as I fly off to Europe for a well-deserved vacation in Croatia, I’ll be thinking about just how unstable and dependent my life is and how much I envy my landlord, who–gosh darnit–once again this year can not afford to take a vacation because of his mortgage.
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Just_Spiffy Says:
June 11th, 2009 at 6:37 am
I wonder with so many people needing to refinance large amounts in the next few years, will the government actually allow interest rates to rise too much? I mean wouldn’t that really do “too much” damage to the economy? Sorta the too big to fail menality kicking in.
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Bob Says:
June 11th, 2009 at 6:52 am
If rates have gone up by the end of the 5 year period you’ll be able to buy the same house for 407K or less, and if you’d waited to buy and just saved all the money you were paying to interest and principal over those 5 years you’d have a way bigger down payment and would be making much smaller monthly payments over the lifetime of the mortgage.
You opinion is based on a prediction five years out. What happens if prices are higher? Interest rates the same or just slightly higher? I take a risk but have a home that I can what I want to.
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cashisking Says:
June 11th, 2009 at 7:46 am
Bob
What was your downpayment – and figure out what the cost of capital is? What are your taxes? What kind of insurance do you have? What do think your costs in terms of upkeep will be annually?
Add those up and the tack that on to your monthly payments. I suspect your looking at another to $1,500 a month not including major repairs.
Now go on craigslist and punch in that amount and see what you could rent.
…. and if you think the long bond/interest rates are going to rally from here you are making a bad bet … FYI long term mortgages are up 10% (yes 10%) over the last month.
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cashisking Says:
June 11th, 2009 at 7:49 am
Sorry, that 10% is in the U.S. … b/c of our large C$ deficit – last estimate was 50 Billion we will be competing for cash with the U.S. therefore our rates will follow. That’s why our rates are starting to trend higher.
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crabman Says:
June 11th, 2009 at 8:58 am
Just_Spiffy: Mortgage rates are set by the bond market, which the BOC has no control of.
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D,s,j,b,s,v. Says:
June 11th, 2009 at 10:07 am
In response to oneangryslav:
“If I am renting a house do I get less privacy than “owning” it?”
Yes if you live in basement,duplex,or one of the floor in a house for example one of my friend was having sex with his wife at the end owner speaks from behind the door”are you done” It’s very difficult to have sex with orgasim,difficult to adjust work schdules,Imagine you go to sleep but other occupants just entering back from work or parties,Imagine you are in a middle of your sleep and a guy upstair beating his wife.Imagine you have to start next day @ 6am but there are lots of overnight parties in a house you lived in.If you live in Condo still your owner or related people knew about you and your work place etc.If you are renting a place you might have to wonder place to place for the same reasons in attempt to get peaceful life.
“How “independent” is a mortgage slave, and how “stable” is one’s life if s/he is working all the time in order to be able to just afford to keep up with mortgage payments?”
Mortgagee is not a slave,mortgage provide oppertunities to afford something which you can’t otherwise to full fill your dreams or else a where house workers,bus drivers,taxi driver,etc. will never become a millionaires.mortgage also provide an alternate in contrast to tenancy.a mortgagee would be free of mortgage sooner or later,A lower income earners who can afford to buy a house or condo in expensive area can move down later and live his/her life mortgage and rent free in case of overshooted appreciation but tenants life is build to last as tenant for life.However i have no concern to compare owners to tenants.This is your life you chose mortgage or tenancy term and conditions.
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realpaul Says:
June 11th, 2009 at 10:35 am
#38 Mortgagee? Better run that through again. It’s the differance between the ‘ee’ and the ‘or’ that makes all the differance.
Meanwhile shocking news, Vancouver has been knocked off the pedastal and replaced by Luanda, Angola.
http://www.honoluluadvertiser......tly+cities.
And did anyone notice the reportage in todays papers?
1) The Vanc Scum has competing stories on the rental issue stating that rents are going up and down while the stock of rental housing is increasing and decreasing. Something for everyone. I think thats called pandering.
2) PM says economy is improving slowly, while new unemployment and economic figures published on the same page say the opposite.
Finally, someone said yesterday that it was the baristas and taxi drivers who owned all the downtown real estate to ’stash their extra cash’. Bwahahahahahaha. I know a guy who is a 1/2 owner cab driver and he showed me his tax filing. After expenses his net was $27,000 in 08. If the baristas at McBucks are making so much cash that they can’t claim it as income I would be very surprised.
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Mold city Says:
June 11th, 2009 at 11:00 am
Just_Spiffy: will the government actually allow interest rates to rise too much?
crabman beat me to it – the government didn’t decide to ‘allow’ these mortgage rates to increase – the bond market made them go up.
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Mold city Says:
June 11th, 2009 at 11:03 am
D,s,j,b,s,v.: The house I live in now has great privacy, but I have lived in houses before where the neighbors were loud or nosy. Fortunately as a renter it’s easy to move if I’m unhappy with an element of the neighborhood that’s out of my control. You know, the kind of thing that might drive prices down or make it hard to sell.
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Anonymous Says:
June 11th, 2009 at 11:21 am
“If I am renting a house do I get less privacy than “owning” it?”
“Yes if you live in basement,duplex,or one of the floor in a house for example one of my friend was having sex with his wife at the end owner speaks from behind the door”are you done” It’s very difficult to have sex with orgasim,difficult to adjust work schdules,Imagine you go to sleep but other occupants just entering back from work or parties,Imagine you are in a middle of your sleep and a guy upstair beating his wife.Imagine you have to start next day @ 6am but there are lots of overnight parties in a house you lived in.If you live in Condo still your owner or related people knew about you and your work place etc.If you are renting a place you might have to wonder place to place for the same reasons in attempt to get peaceful life.”
IF YOU “OWN” THE HOUSE AND HAVE A MORTGAGE HELPER IT’S THE SAME THING.
I SMELL A TROLL, NO ONE CAN REALLY BE THAT STUPID!
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Just_Spiffy Says:
June 11th, 2009 at 12:09 pm
” crabman Says:
June 11th, 2009 at 8:58 am
Just_Spiffy: Mortgage rates are set by the bond market, which the BOC has no control of.”
Yes I agree that mortgage rates are set by the bond market. However, doesn’t the Government sometimes try to control Bond rates by messing with the money supply? Like what they are trying to do in the U.S. with printing money? I’m just musing with the thought that if so many Canadians are in debt up to their eyeballs, would the government of Cdn be forced to bail them out, by trying to control the bond rates. Sorta like what’s happening in the US. Inflation helps those with debt and not us savers!
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Anonymous Says:
June 11th, 2009 at 12:26 pm
Anonymous: In dispute to the on going sound owners own the place but tenants oh, ah,ouchhh,MUST LEAVE.
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crabman Says:
June 11th, 2009 at 12:41 pm
Just_Spiffy: Governments around the world are borrowing lots of money right now, which means they are issues lots of debt. During the economic crisis, there have been plenty of buyers for this debt. (China, OPEC, nervous investors, etc.)
As the economy improves, people move away from safe government bonds, which drives rates up. This is why we’ve recently seen stocks and commodities doing well, and bond rates rising. If this trend continues, there will be fewer buyers for an increasing amount of debt, which could drive rates much higher regardless of what the Fed or BOC do.
Check out this graph for the correlation between various rates recently.
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Richard Stabile Bergen County Real Estate Says:
June 11th, 2009 at 12:43 pm
I am hoping that for the near term rates will now moderate. The heavy borrowing to cover all the programs and deficits by the U.S. is starving off capital. The yield curve has steepened. The only silver lining is the jumbos are not so bad. The spread from conforming is only about 5/8%. This is way better then the 4th quarter of 2008.
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Sold2Soon Says:
June 11th, 2009 at 1:09 pm
….And so is some property in Coquitlam…going up in flames, that is! This makes for two or three in the last year, doesn’t it?
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read on Says:
June 11th, 2009 at 3:09 pm
ok, too many retard trolls, too little real argument.
think I’ll take a break from reading this blog for a few months
enjoy the summer everyone
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Crash Says:
June 11th, 2009 at 3:14 pm
I see some local real estate agents have jumped on the latest supply/demand numbers. Two R/E agent sites I looked at have the same BCREA sourced graph illustrating a converging supply/demand trend. Ever the pumper optimists, one forcasts imminently rising prices (sure…) and that BC will soon become unafforable again (like we aren’t now?) along with a few gems from Cam Muir with his usual litany of why sales are up and prices will increase (he always has different reasons; it’s always entertaining if nothing else). With mortage rates increasing at an escalating pace, it should be an interesting summer and fall.
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realpaul Says:
June 11th, 2009 at 4:35 pm
BOC Gov Marc Carney flip flops off holding intrest rates low. Gee Marc, are you finally having to acknowledge the raging food and energy price inflation? This is not, repeat not because of an improved outlook in the CDN economy. Food and energy prices have been ballooning worldwide because of competition for food products and materials, particularily from Asia.
http://www.examiner.com/x-6012.....iner-email
BOC is going to have to stomp on the wet dreams of the real tards to keep a lid on spiralling price inflation here. He’s painted himself into a corner though having dropped rates to zero to juice the spending of savings by offering negative real returns.
I have long postulated the governments plan all along has been to get the savers to stop saving and crystallize their investments. This has created windfall tax revenue and juiced the economic numbers without them having to make any fiscal investments. Nice play, screw the seniors, great idea.
The social costs will be huge as a bulk of the retired community can no longer support themselves when the outlive their money. But as long as the government doesn’t have to pay out a return on bonds they figure they’re ahead. Wrongo. False economies always fail. We’re seeing that with the BOC’s crying uncle today.Bond rates are set in the global market, the BOC has fired off it’s last rounds bringing rates to zero. The real debt of Canadians is at an all time high at 130% of disposable income. There are no more fish in the stream to fry it seems because the economy is still going backwards. Meaning there is no more consumer juice left in the wallets of the sheeple.
Commodities are back on fundamentals and the CDN dollar is following oil and resources back up on the back of world demand. CDN dollar will strengthen and the CDN government can no longer afford to intervene. With the bond guys seeing Carneys predicament they see the dollar going higher and higher intrest rates are only going to juice the stream.
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oneangryslav Says:
June 11th, 2009 at 4:50 pm
realpaul:
realpaul, do you know if that figure includes mortgage debt?
I just laugh when I hear the disparaging remarks about the profligacy of US residents from smug Canadians, and then point out to them that the our (Canada’s) debt burden (per capita) is even more onerous than than it is in the US.
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ursus Says:
June 11th, 2009 at 5:40 pm
Hey luc (post #2),
I’ve got 100% down payment, and wating for rates to go WAYYY up, to bring prices WAYYY down.
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Just_Spiffy Says:
June 11th, 2009 at 5:47 pm
It would be so sweet if rates went waaaay up. I see the potential for them to. They’ve been so low for so long. It’s been annoying really.
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Just_Spiffy Says:
June 11th, 2009 at 5:52 pm
I had some interesting bond conversations with people today and they pointed out the the US is having a heck of a time keeping bond yields where they want them. Apparently not much demand for the US 10 year bonds. So EVEN with the Government printing money and buying its own bonds to try to stabalize prices where they want them, they can’t. That was encouraging to me anyway. Seems like the government can try to control them, but doesn’t have complete control which is encouraging.
Thanks Crabman for the graph. I’m gonna have to try and puzzle over it a bit more later. Looks intruging though.
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Anonymous Says:
June 11th, 2009 at 6:25 pm
thompson the troll mortgage broker is back.
he calls himself krissh and thumbsup and a bunch of other names. He thinks acting dumb and making dumb arguments might bring him more business.
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Anonymous Says:
June 11th, 2009 at 7:17 pm
Anonymous: D,s,j,b,s,v.also have few more names include username2010,laud speaker,first post etc.but so far on this thread.
Dave Dosh
Satv
John
Browntown
Supraboy
Vancouverboom2
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Specuskeptic Says:
June 11th, 2009 at 8:00 pm
”Dave Dosh
Satv
John
Browntown
Supraboy
Vancouverboom2”
Thanks for leaving us the rosetta stone of troll/jackasses.
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realpaul Says:
June 11th, 2009 at 9:34 pm
oneangryslav:
#51 OAS, it’s actually 138% but who’s quibbling. The calculation is is the article
“The conventional wisdom seems to be that the financial situation of Canadian households is generally sound and certainly much better than that of our profligate and heavily indebted American neighbours. The Bank of Canada argued in its end of 2008 Financial System Review that “(O)verall, despite a modest deterioration, the financial position of the Canadian household sector remains relatively positive.” ( p.21) The 2009 Budget displayed a re-assuring Chart showing US household wealth falling far more precipitously than in Canada. (Chart 2.5). And it is true that household debt as a percentage of after tax (disposable) income in 2008 was, at 138%”
http://www.progressive-economi.....canadians/
“Yeehah, we’re all gonna die” as Country Joe and the Fish sang. It’s only money right and looky how shiny those counter tops are, and they’re giving me a free car to sign up today. OMG Droooooooooooollllllllllll.
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RennieWhereRU? Says:
June 11th, 2009 at 10:05 pm
Bob. I wont raise obvious prior points in that you paid too much for the house to begin with. I think your being too agressive with rental equivalent of the house. I doubt your house would rent for $2,100 per month. Assuming the house you own (well the bank owns it until you pay that mortgage off) is worth $550,000, the rent should be around $1,500 to $,1750 tops in todays market. I figure the house we are in is worth $550,000 and we are paying $1,450 in rent. So not only in this artificial low interest rate environment (rates about to and are rocketing upwards) are your monthly mortgage payments higher than rent equivalent, you have to pay property taxes, insurance, utilities (sewer and water), R&M. I dont get the concept of long term home. I like the fact after a couple of years I get sick of one place or neighbourhood and can leave with one months notice.
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Just_Spiffy Says:
June 11th, 2009 at 10:15 pm
Depends where Bob’s house is located. $1900 to $2100 is pretty much going rent right now for a whole house in the Langley area. $1400-1600 gets you a townhouse only or the top half of a house. Might be different in other areas of course. I’ve only been watching Langley for the past few months, so I don’t know about different areas.
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afc Says:
June 11th, 2009 at 10:24 pm
Bob:
Bob, I am a lender and a financial planner. I assume you need two income to serve your $500K mortgage. I don’t know how many kids you have and what kind of life style you have. I have many clients with $500K mortgage with a rate around 4%. One couple with combined income of $130K now in trouble to handle their mortgage payments. Their PLC and visa is up to the limit. For myself, I have a combined income just over $160K, I would never borrow $500K. Lots of things could happen, one of you could lose his/her job. It could happen to anybody. My several co-workers just got laid off. Probably they never thought it could happen to them since a couple of them had been working for our institution for over 20 years.
I agree with you, if you can handle the payment (don’t forget property tax, insurance, utility, reparement), you may end up at a similar position with some one waited and bought cheaper but with a higher interest rate.
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Anonymous Says:
June 11th, 2009 at 11:21 pm
afc:Hey dumbass 320 there are 319 other financial planners have been found on blogs all of them looks like an idiots now.
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patriotz Says:
June 12th, 2009 at 12:48 am
oneangryslav:
“…The real debt of Canadians is at an all time high at 130% of disposable income…”
realpaul, do you know if that figure includes mortgage debt?
Yes. Remember there are a lot of people who have no non-mortgage debt at all. There is no way the rest could borrow enough to average out at 130% of income.
What matters for mortgage debt, like any other capital debt (as opposed to consumer debt), is whether the capital asset yields enough income to cover the interest payments. If so, the asset/debt portfolio is actually making money for the borrower. Like the preferred shares that I bought in my margin account a few months ago.
However if not – like for RE in BC, where the rental value is far less than interest cost for any house bought during the bubble – the portfolio loses money for the borrower, big time, long term.
One more thing – that 130% is the Canada-wide average – the average for BC is way higher.
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No Longer Looking Says:
June 12th, 2009 at 2:05 am
None of the units in the Coquitlam fire were pre-sold. I went to their site and there appears to have been an attempt to pre-sell them: http://www.springbankcorp.com/Projects.aspx?ID=7
The developer indicates that they will build again. Maybe, but probably at a much later date. If the Evergreen Line is stalled another decade, I have my doubts though.
News reference:
“The condo complex was called Evergreen, a venture that was scheduled to be completed in September, one of the developers told CBC News on Thursday.
None of the units had been presold, and the developers said they were insured and would mostly likely rebuild the complex.”
http://www.cbc.ca/canada/briti.....-fire.html
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afc Says:
June 12th, 2009 at 6:46 am
Anonymous:
There may be lots of dumb financial planners since financial planning is not regulated and anyone can call himself a financial planner. But I would think in most cases it is the customer who is dumb. If you anyone goes to a lawyer, an accountant or even a plumber, he is expection to pay a hour rate. Nearly 100% people expecting to receive financial advice for free. Everyone has to make a living, right?
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realpaul Says:
June 12th, 2009 at 9:50 am
patriotz:
Very good point about the debt ratio being much higher in BC. If you ever run across the number I would be very interested to see it. You how difficult it is to real time information in this province.